Banking financial institutions offer so many services to their users that it is difficult to keep count of all the many services and how they can benefit us. But do you ever wonder how you get that extra interest by saving money in your bank account or any other schemes that help you earn from interest? Here is the inside scoop on what happens at a financial institution. As many people earn through bank interest, there are also those many people who pay interest rates to the bank when they take loans.
The interest rate paid by the borrowers is higher than what we earn from our bank accounts. We get the interest money that we are promised through interest rates on loans and the extra money stays with the financial institutions and that is how a bank works and functions.
What is a credit union?
Apart from what was just mentioned above, there are many other types of financial institutions in every developed city. If you have never heard of a concept such as credit union then you have stumbled across the perfect article because that is exactly what we are here for. In the business world, there are mainly two types of companies – profit-earning companies, and non-profit organizations (NGOs). Just like that, banks also have their version of an NGO, and that is a credit union. They do not earn any types of profits, and they focus mainly on lending money for a loan and managing accounts of their bank users.
Differences between credit unions and banks
Besides the obvious, there are several other differences between banks and credit unions. When a bank functions, they mainly function and earn profits for their shareholders and not the customers. If you invest in a bank’s shares, you become a shareholder, and if you open an account in a bank, you are a customer. A central union’s primary focus is its customers.
When you open an account at a credit union, you become a member of the union. When you open an account at the bank, you are their customer. Utah credit union personal banking has been a hoot, and it is definitely worth your while!